Are workers being cheated?

Friday

Dec 7, 2012 at 6:00 AM

Clive McFarlane

A general contractor, looking to maximize his profits, takes on a questionable subcontractor, who then seeks to line his pockets by misclassifying his workers and paying them under the table, or not at all.

This formula, in the eyes of Manny Gines, organizer for the New England Regional Council of Carpenters, has become the preferred way of doing business in the state’s construction industry, and he has the evidence to prove it.

In the last couple of months, for example, Mr. Gines has gathered evidence on a housing for the elderly construction project in Hopkinton, a public university library renovation project, and an affordable housing project in Worcester’s Main South.

In all three cases he was able to document the misclassification of workers, and workers being paid under the table, or not being paid at all.

In the university library project, Mr. Gines uncovered paperwork that seems to indicate fraud, that is, one worker being listed at two separate job sites during the same time period.

Some of the times, by confronting the general contractor on a project and threatening to picket the job site, Mr. Gines has been able to secure wages for workers who were not being paid for their labor.

He was successful, for example, in securing wages for four undocumented workers who were not being paid on the Hopkinton project.

In these cases, and the many others with which he has been involved over the years, Mr. Gines has kept close contact with the state attorney general’s office, alerting it to improprieties and providing supporting documentation.

The problem, according to Mr. Gines, is that the state is woefully ill-equipped to deal with the enormity of the challenge, which is not to say the state is standing idly by while all this is going on.

In 2008, Gov. Deval Patrick created a Joint Task Force on the Underground Economy, whose orders included coordinating the efforts of multiple state agencies to stamp out fraudulent employment activities.

Since its inception, the amount of fines, back taxes and unpaid wages collected from employers has grown from $1.4 million in 2009 to $11 million in 2011.

Building-construction is not the only industry vulnerable to illegal employment activities.

On Wednesday, the Department of Unemployment Assistance, a member agency of the Joint Task Force, announced that it had concluded audits of three businesses — an adult entertainment establishment, an auto auction company and a home health care agency — in which $11.5 million in unreported wages, 2,300 misclassified employees and $2.5 million in unpaid DUA obligations were uncovered.

Mr. Patrick now says his administration will launch a full-scale study of the underground economy to determine the scope of its financial cost on the state.

But Mr. Gines said the state does not need a study to uncover what is already very evident.

What is needed, particularly in the building industry, is more aggressive enforcement of state laws, he said.

He noted, however, how subcontractors working on a downtown building project, were exposed by his organization for misclassifying and not paying his workers. After being booted off the Worcester project, the subcontractor changed the name of his company and within weeks was working on another project in Springfield.

With the persistence of Mr. Gines, this particular subcontractor was finally barred from public works projects in the state.

“Studying this issue now is a waste of money,” he said.

“We know what’s going on. If the state wants to spend money on this, it should spend it on increased enforcement.”